AAR REPORTS SECOND QUARTER FISCAL YEAR 2015 RESULTS

Cash flow from operations of $16.0 million, free cash flow of $8.0 million

WOOD DALE, ILLINOIS (December 18, 2014) — AAR (NYSE: AIR) today reported second quarter fiscal year 2015 consolidated sales of $490.0 million and net income of $15.2 million, or $0.38 per diluted share. For the second quarter of the prior fiscal year, the Company reported sales of $540.7 million and net income of $20.0 million, or $0.50 per diluted share.

Within the Aviation Services segment, sales decreased 11.1% to $377.7 million. Supply chain sales to commercial and defense customers experienced double-digit growth but thiswas offset by lower sales of the Company’s airlift and MRO services, although MRO facility utilization ramped up during the quarter. Comparability of financial performance for this quarter was also negatively impacted by the sale of two aircraft in the prior year period.

“Today we reported second quarter FY 2015 results in line with our expectations. Sales to commercial customers increased 2.1% primarily due to the double-digit growth from our Aviation Services supply chain business,” said David P. Storch, Chairman and Chief Executive Officer of AAR CORP. “As we enter the second half of Fiscal 2015, we expect reduced revenues from our businesses that are tied to military operational tempo, while we expect solid growth from our Aviation Services supply chain and MRO businesses that, in total, should lead to sales growth on a consolidated basis.”

During the quarter, the Company experienced the following business wins:

Commercial

Renewed a five-year agreement with Allegiant for airframe maintenance of their MD-80 and 757 fleet of aircraft.

Supported approximately 100 aircraft from the Company’s supply chain hub in Brussels where an additional power-by-the-hour contract for a new customer’s fleet of 737s is expected.

Government and defense

Awarded a $49 million contract by the Department of the Navy, Naval Supply Systems Command, to provide personnel recovery, casualty evacuation and search and rescue airlift services in West Africa.

Received a one-year extension on the vertical replenishment contract for airlift services for U.S. Naval vessels in the Western Pacific and Indian Oceans.

Selected by AMMROC (Advanced Military Maintenance Repair and Overhaul Center), the Abu Dhabi-based Joint Venture between Mubadala Development Company, Sikorsky and Lockheed Martin, to support the design, outfitting and integration of key areas of AMMROC’s state-of-the-art facility in Al Ain, UAE.

Second quarter sales to commercial customers represented 64.7% of consolidated sales, compared to 57.4% of consolidated sales in the second quarter of last year, while sales to government and defense customers represented the balance.

Consolidated gross profit margin was 16.0% for the second quarter down from 16.8% last year due to unfavorable margin mix. Aviation Services segment gross profit margin was 16.9%, up slightly from 16.8% in the prior year period, and Technology Products gross profit margin declined to 13.0% from 17.0% in the prior year period.

Selling, general and administrative expenses declined $4.0 million over the prior year as a result of cost-saving measures implemented by the Company.

Net interest expense for the quarter decreased to $9.5 million from $10.2 million in the second quarter of last year.

During the quarter, the Company generated $16.0 million in cash flow from operations and free cash flow of $8.0 million while increasing its investment in its supply chain business to fund future growth. The Company paid cash dividends of $3.0 million and re-purchased shares for $1.7 million.

Average diluted share count for the quarter was 39.1 million compared to 39.2 million in the second quarter last year.

Conference Call Information

AAR will hold its quarterly conference call at 3:45 p.m. CST on December 18, 2014. The conference call can be accessed by calling 866-802-4322 from inside the U.S. or 703-639-1319 from outside the U.S. A replay of the conference call will be available by calling 888-266-2081 from inside the U.S. or 703-925-2533 from outside the U.S. (access code 1623126). The replay will be available from 8:15 p.m. CST on December 18, 2014, until 11:59 p.m. CST on December 26, 2014.

About AAR

AAR CORP. is a global aviation and aerospace company that employs more than 6,000 people in 17 countries. Based in Wood Dale, Illinois, AAR supports commercial, government and defense customers through two operating segments: Aviation Services and Technology Products. AAR’s services include inventory management and parts distribution; aircraft maintenance, repair and overhaul; and expeditionary airlift. AAR’s products include cargo systems and containers; mobility systems and shelters; advanced aerostructures; and command and control systems. More information can be found at www.aarcorp.com.

About AAR

AAR is a global aftermarket solutions company that employs more than 5,500 people in over 20 countries. Based in Wood Dale, Illinois, AAR supports commercial aviation and government customers through two operating segments: Aviation Services and Expeditionary Services. AAR’s Aviation Services include inventory management; parts supply; OEM parts distribution; aircraft maintenance, repair and overhaul; engineering services and component repair. AAR’s Expeditionary Services include airlift operations; mobility systems; and command and control centers in support of military and humanitarian missions. More information can be found at www.aarcorp.com.

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This press release contains certain statements relating to future results, which are forward-looking statements as that term is defined in the Private Securities Litigation Reform Act of 1995. These forward-looking statements are based on beliefs of Company management, as well as assumptions and estimates based on information currently available to the Company, and are subject to certain risks and uncertainties that could cause actual results to differ materially from historical results or those anticipated, including those factors discussed under Item 1A, entitled “Risk Factors”, included in the Company’s Form 10-K for the fiscal year ended May 31, 2017. Should one or more of these risks or uncertainties materialize adversely, or should underlying assumptions or estimates prove incorrect, actual results may vary materially from those described. These events and uncertainties are difficult or impossible to predict accurately and many are beyond the Company’s control. The Company assumes no obligation to update any forward-looking statements to reflect events or circumstances after the date of such statements or to reflect the occurrence of anticipated or unanticipated events. For additional information, see the comments included in AAR’s filings with the Securities and Exchange Commission.